1. Abstract
The recent leak of a German military report on peak oil has generated much interest among peak oil analysts. The study was written by the Future Analysis department of the Bundeswehr Transformation Center, and is entitled, Peak Oil: Implications of Resource Scarcity on Security. While some analysts view the German study as significant, others have argued that it is mostly a summary of existing information and provides few new insights. This review examines the Bundeswehr report in the context of other publicly-available military analyses of peak oil and concludes that the new German report is highly significant for several reasons.

2. The context: recent military analyses of peak oil
Although there were virtually no publicly-available military analyses of peak oil prior to 2005, there has been an explosion of interest during the past half-decade. An annotated bibliography of this literature was posted last year and has just been updated.

Of the sixty studies which are listed in the annotated bibliography, forty are flagged with “POc” indicating that the authors view peak oil as a credible near-term concern. This author has yet to encounter a study conducted by a military analyst which dismisses peak oil as an implausible, alarmist issue. (If anyone is aware of such a conclusion by an analyst within the military/security research community, please advise Energy Bulletin.)

Among the military studies which regard peak oil as a credible concern, there is much consistency in both the subject-matter and the conclusions. Most of these studies provide a summary of Hubbert’s model and underline the fact that his prediction of the peak in U.S. oil production was right on schedule. They usually mention the growing list of post-peak oil producers and highlight the unique properties of petroleum (energy density, versatility, convenience), issues of scale and infrastructure, and so on.

These military studies invariably deal with energy security vulnerabilities such as import dependency, chokepoints and geopolitical risks, resource nationalization, and the potential for resource wars. They also note the transfer of wealth to unfriendly regimes and the irony of inadvertently funding one’s own antagonists. A few studies consider the risks of a global oil supply shock, the recent al Qaeda plots against Saudi oil facilities, and speculate about the implications of catastrophic damage to facilities which are vital to global oil exports.

However, these studies stop short of addressing certain inevitable “next steps” which logically follow from those energy security vulnerabilities:

What are the likely domestic impacts of a prolonged global oil shock?

How might the economy and social fabric of modern industrialized societies cope with such a scenario?

Two common themes in the literature on oil supply shocks are these: oil shocks are notoriously difficult to plan for and administer, and the potential for domestic civil disorder is considerable. Despite the near-unanimity among military analysts in acknowledging that the peaking of global oil production constitutes a very serious issue, almost all of these military analysts have stopped short of discussing the potential for widespread domestic disorder.

3. The Bundeswehr study
The recent leaked German document has taken those extra steps and is significant for several reasons:

a. It was conducted by a team of military analysts

Unlike the numerous studies of peak oil which have been conducted by War College candidates (and which invariably contain an opening disclaimer pointing out that the opinion of the officer in no way represents the views of their respective service or Department of Defense), this study is the result of intensive analysis by a team of military analysts, not the opinion of a single officer. In this respect the German report is similar to the two most recent Joint Operating Environment projections which were issued by the US Joint Forces Command (Nov. 2008 and Feb. 2010), both of which mention the potential for “a severe energy crunch.”

b. It is comprehensive

At 99 pages (80 pages of analysis and 19 pages of appendices), the Bundeswehr study is very comprehensive in its scope and is thoroughly referenced. The fact that a team of experienced military analysts would devote such attention to the peaking of global oil production is itself a confirmation of the validity of this issue.

c. It stresses the potential for internal disorder

This study is unique in its detailed examination of how the peaking of global oil production has the potential to cause profound disruptions within Germany and other industrialized societies.

Section 3.1.4 is entitled, “The transition to a post-fossil society leads to economic and political crises” (p. 38-44). This section considers the damage which high oil prices could inflict on modern economies: reductions in transportation capacity, risks to supply chains (especially food), high unemployment, the potential need for rationing and other free-market restrictions, a reduction in standard of living, a loss of faith in the political process and the potential for the emergence of extremist political positions.

Section 3.1.5 is entitled, “Interventions become more selective – actors are over-strained” (p. 45-46). This section examines certain international implications, pointing out that because of the need to “focus on one’s own problems,” major international stakeholders may become incapable of assisting other countries, resulting in a weakening of international institutions and relief capabilities.

Section 3.2 is entitled, “Systemic risks of exceeding a Tipping Point” (p. 47-50). Here the authors warn against “a false assumption [that] a phase of slow reduction in the amount of oil leads to an equally slow reduction in economic capacity” (p. 47). Instead, they warn that a rapid chain reaction of downward trends could be set in motion: a loss of confidence in the market, recession, increasing unemployment, rising food prices, and extreme pressure on government budgets. Many of these conditions are self-reinforcing, so there is the potential for a tipping point to be reached, leading to a medium-term scenario whereby “the global economic system and every market-based economy collapses” (p. 49, in bold). The authors then offer further theoretically possible consequences: crashing financial markets, a loss of confidence in currencies, mass unemployment, the collapse of critical infrastructure, and famine.

This paragraph is worthy of particular consideration:

The abovementioned chain of events shows clearly that the energy supply of the economic cycle must be assured. The energy supply must be sufficient to allow positive economic growth. A shrinking economy over an indeterminate period presents a highly unstable situation which inevitably leads to system collapse. The risks to security posed by such a development cannot even be estimated (p. 50, emphasis added).

Such profound possibilities remind us of the opening sentence of the Hirsch Report which was released five years ago: “The peaking of world oil production presents the US and the world with an unprecedented risk management problem” (emphasis added).

d. The Bundeswehr conclusions are in stark contrast with the ongoing reassurances and inaction of civilian authorities

During the past five years, a clear trend is emerging: while civilian authorities routinely dismiss concerns about peak oil, military analysts are virtually unanimous in viewing it as a serious issue which ought not to be underestimated. The fact that a team of objective military analysts has derived such stark conclusions should be sufficient to compel civilian authorities to take this issue equally seriously, and to respond proactively.

In their final paragraph, the authors warn, “… the dangers of the erosion of our resource base must be incorporated into the social consciousness. Only in this way can we raise the necessary awareness…” (p. 80). The ongoing denial by civilian authorities is clearly a major barrier to building public awareness, which is in turn a prerequisite to effective action.

The fact that this study was leaked is also significant. This unapproved draft document allows the public to receive in its unedited, uncensored form the conclusions of the Bundeswehr Future Analysis team. The extraordinary level of concern which is expressed in the German military document contradicts the blithe assurances which continue to be espoused by politicians, bureaucrats and industry representatives.

4. Conclusion
Military analysts are in a position which is unique and which affords them special credibility. Unlike politicians, military analysts are not accountable to voters or constrained by the short time-frame between elections. Unlike industry executives, they are not accountable to shareholders or pressured by corporate self-interest. Unlike bureaucrats, they have no need to pretend that all contingencies have been looked after and properly planned for. As military personnel, they may have access to information which is unavailable to others. Furthermore, military officers are responsible for the security of their nations. Energy security is clearly vital to national security, so military analysts have not only the right, but also a duty, to report when they identify obvious vulnerabilities.

This is what the Future Analysis team has done. Their study is carefully worded, thoroughly referenced and clearly identifies the vulnerabilities. Their intended audience was almost certainly their military superiors, who would then have decided in what form (if at all) this information would be made available to civilian authorities and the German public.

Of over sixty military analyses regarding future oil supply which are publicly available, the Bundeswehr study is the only one which explores the severe domestic effects which could arise from a prolonged constriction of oil supply. It does so in a sequenced, rational manner, and its stark conclusions remind one of the warning made by Robert Gates following the 2005 Oil Shockwave exercise: “The threat is real and urgent, requiring immediate and sustained attention at the highest levels of government.”

The Bundeswehr document should be translated so that its complete version can be examined by civilian authorities and military analysts around the world. The complete document should be of particular relevance to emergency planners, who should take a hard look at their existing plans for liquid fuel emergencies.

As the German authors concluded, “Time is the deciding factor for the success of a transformation to a post-fossil fuel society” (p. 80). This remarkable study warns that we cannot afford to waste any more of it.